Safe Haven Currencies Rise Amid Tensions and Economic Data

Safe haven currencies, the Japanese yen and Swiss franc, saw gains as news broke of Iran preparing a missile attack against Israel and resilient U.S. labor market data. The yen rose against the dollar, while the dollar index and Swiss franc remained largely stable. The prospect of future interest rate cuts by the Federal Reserve, along with steady U.S. manufacturing and improving job openings, also impacted market sentiment.

Safe haven currencies, such as the Japanese yen and Swiss franc, gained traction on Tuesday following reports that Iran is gearing up to initiate a ballistic missile attack against Israel. Concurrently, U.S. jobs data indicated a sturdy labor market. A senior White House official confirmed ongoing U.S. efforts to support Israel's defense initiatives.

Adam Button, chief currency analyst at ForexLive, noted, 'The market has largely ignored the Middle East conflict in the last month, but a direct Iran-Israel confrontation is always at risk of spiraling.' Consequently, the Japanese yen saw a 0.1% hike against the U.S. dollar to 143.5, while the dollar stayed relatively flat against the Swiss franc at 0.846.

Meanwhile, the dollar index climbed 0.4% to 101.15. U.S. economic indicators showed resilience, just a day after Federal Reserve Chair Jerome Powell denied the likelihood of a substantial 50-basis point rate cut in the next Fed meeting. However, traders remain divided on the probability of future cuts, pending forthcoming economic data.

(With inputs from agencies.)